Dive Brief:

• Amazon is banning third-party sellers from shipping Prime orders with FedEx Ground or Home beginning this week, according to an email the company sent to merchants obtained by the Wall Street Journal. Amazon cited a "decline in performance" as its reason for preventing sellers from using the carrier.
• The temporary ban will continue "until the delivery performance of these ship methods improves," the email said. FedEx Express will still be available to Amazon Prime sellers. Standard, non-Prime orders can still be shipped via FedEx Ground and Home.
• "While this decision affects a very small number of shippers, it limits the options for those small businesses on some of the highest demand shipping days in history, and may compromise their ability to meet customer demands and manage their businesses," a FedEx spokesperson told sister publication Supply Chain Dive via email. "FedEx Ground stands ready to support our customers and will continue to deliver record-breaking volume this holiday season."

Dive Insight:

Amazon ceased shipping orders with FedEx Express and FedEx Ground after FedEx declined to renew the retailer's contract earlier this summer. At the time, FedEx was carrying roughly 1.6% of Amazon's total package volume, representing 1.3% of the carrier's overall revenue. Executives said the cost-intensive nature of the retailer's shipments meant dropping them could open up resources for FedEx to expand its customer base in the broader e-commerce market.

Since then, all eyes have been on both companies as they work their way through peak season.

As Cyber Monday hit, reports began to surface that Amazon was not living up to its Prime delivery promises. According to data from ShipMatrix, a consulting firm, Amazon vans delivered 93.7% of packages ordered during the week ending in Dec. 7 on time, down from 98.2% in 2018.

Amazon's SVP of Operations Dave Clark disputed the reports, tweeting they did not accurately represent the company's performance.

Seen a few reports that saying we’re having delivery problems. Not the case. Some deliveries were briefly impacted by weather earlier in the week but we quickly re-balanced capacity and it’s all systems go now. Thanks to our customers for what looks to be another big holiday.????????

— Dave Clark (@davehclark) December 6, 2019

FedEx's on-time delivery performance was 90.4% for the same time period, according to ShipMatrix. The carrier previously announced it expected to handle a record 33 million packages on Cyber Monday alone and to double its daily average volumes on the Dec. 9, and Dec. 16. 

UPS and the U.S. Postal Service fell to 92.7% and 92.3% respectively.

Inclement weather and backlogged sortation hubs were the primary cause of delays across the carriers, the report found. 

However, Convey, a last-mile delivery experience software company, conducted an analysis covering "2.5 billion shipping events and tens of millions of packages" shipped since Thanksgiving 2019, which found FedEx's on-time delivery performance was 68.3%, down from 77.5% in 2018, according to results shared with Supply Chain Dive via email.

UPS decreased to 80%, versus 86% in 2018, and USPS improved, moving up to 86% in 2019 from 76% last year. Amazon was not included in Convey's report.

Overall, faster shipping offerings can be linked to increased delays, according to a study of UPS and FedEx shipments conducted by LateShipment.com.

"This can be primarily attributed to express shipping having to function within a tighter time window from pickup to delivery and the kind of transportation methods involved," LateShipment.com CEO Sriram Sridhar told Supply Chain Dive in August. "These shorter windows with short time padding on either end leave very little scope for recovery from mistakes, which results in a higher frequency of delays."